Concerns over clients not repaying loans

 By SHIRLEY MAULUDU

THE National Development Bank (NDB) has expressed disappointment at clients who borrow start-up capital for their businesses but fail to repay.

Executive manager lending Trevor Cain said the perception with many customers was that the NDB was the Government’s bank and therefore any government funding allocation was theirs and nil repayment required.  

“PNG is among the highest in the Pacific with defaults … defaults in excess of 90 days are reportable to BPNG,” Cain said.

“NDB has had a long history of default payers which lead to the bank nearly going bankrupt. Some say that if I have access to this government money, I don’t need to pay it back because I’m part of the government.

“The government began recapitalising the Bank (NDB) and has injected close to K300 million since 2009. 

“However the demand to support the SME sector (the bank’s entire market) continues to grow. 

“In recent years both a tightening up of credit and better collections has maintained the arrears to around 3.5 per cent on average. The focus is on collections and recovery so that these funds can be re-lent to new customers.

“Following good governance and worldwide norms, contribution from customers in the form of equity is required.  The age old principle of injecting your (customers) own funds thus carrying some of the risk is a driver for ensuring your business survives and repay any loans.  NDB is no different and with a low interest rate, the bank can ill afford the losses of the past.”